World's Demand for Oil Nearing Its Peak

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". . .demand for burning fuels is no longer what it used to be"

The world may soon achieve something long dreamed of by governments and policymakers: higher economic growth without using more oil.

Rising efficiency, conservation and substitution are steadily reducing the amount of oil needed to fuel an increase in goods and services produced around the world.

Oil demand in the rich, industrialized countries of the West already appears to have peaked and the trend in developing economies is toward an ever-smaller increase in the amount of oil consumed for every extra unit of economic growth.

Global oil intensity—oil demand growth divided by economic growth—has fallen by about 2% a year during the last decade and the decline is now accelerating, spurred by high oil prices, moves to alternative fuels and measures to curb global warming.

This does not yet mean that absolute oil consumption is falling because population growth and rising wealth in poorer parts of the world will push up oil consumption for some time.

But it does mean global oil use will eventually peak and start declining—and "oil-less growth" may not be far away.

"The rate of decline of oil intensity will accelerate," said Eduardo Lopez, oil demand analyst at the IEA in Paris, which advises industrialized countries.

"There is a structural change—difficult to measure admittedly, but clear—that demand for burning fuels is no longer what it used to be."

Data from the IEA shows it is not just the richer parts of the world that are weaning themselves off oil.

Although fuel intensity in the developed countries of the OECD has consistently been far lower than in non-OECD countries, the rate of decline has been very similar, IEA figures show.

All the big forecasters expect the decline in oil intensity to pick up speed over the next decade.

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